Archive for February 22, 2007

Business this week: 17th – 23rd February 2007

February 22, 2007 Leave a comment

Business this week

Feb 22nd 2007
From The Economist print edition

In a closely watched decision America’s Supreme Court overturned punitive damages of $79.5m against Philip Morris that were handed down by a jury in 1999. The case centred on an Oregon man who had smoked for 42 years and died of lung cancer. The Supreme Court ruled that the jury’s award to his widow had overstepped the mark by punishing the cigarette-maker for harm done to others, but it failed to set any limits on future punitive-damage awards and sent the case back to Oregon’s state Supreme Court for a new hearing. See article

The European Commission slapped its biggest-ever antitrust fine, €992m ($1.3 billion), on five lift manufacturers it accused of operating a cartel. Germany’s ThyssenKrupp and America’s Otis were among the companies the commission said had “artificially bloated” the construction and maintenance costs of buildings in European countries.

After years of intense rivalry, Sirius and XM announced their intention to merge. Once considered the new kids on the block, the satellite-radio networks have been struggling to respond to competition from recent advances in broadcasting, such as through the internet. Their merger is far from certain; America’s communications and antitrust regulators promised that the $4.6 billion deal will be heavily scrutinised. See article

Google encroached further into Microsoft’s territory by offering businesses a new set of web-based word-processing and spreadsheet services. The internet company released a similar package to consumers last year.

Another effort is under way to combine Warner Music and EMI. Warner confirmed it had approached EMI after obtaining support from IMPALA, the trade group for independent music-labels in Europe. Last year IMPALA complained to the EU that consolidation among big music companies would hurt competition.

The board of Portugal Telecom rejected an improved €11.8 billion ($15.5 billion) bid from Sonae, a Portuguese conglomerate, and bolstered its defences by announcing a €6.2 billion shareholder-remuneration package. The saga of what would be Portugal’s biggest takeover has been rumbling on for a year.

Banco Bilbao Vizcaya Argentaria made its biggest acquisition outside Spain when it agreed to buy Compass Bancshares in a $9.6 billion transaction. BBVA has been steadily increasing its business in the southern and south-western United States, on account of the region’s growing Hispanic population. Compass, based in Birmingham, Alabama, operates more than 415 banks from Arizona to Florida, including 164 in Texas.

Sberbank, Russia’s largest savings bank, looks likely to have raised $8.8 billion from its share offering, the country’s second-biggest following last year’s issue by Rosneft, an oil firm. Sberbank’s sale raised a bit less than had been forecast by analysts. Some investors had grumbled that the prospectus was only available in Russian and that the bank (unlike Rosneft) won’t be selling shares on foreign exchanges.

HSBC replaced the head of its North American unit, which has been reeling from losses in the subprime mortgage market. Meanwhile, the share price of NovaStar Financial plunged by 40% as it revealed losses in the subprime market.

EADS, the parent company of Airbus, delayed launching a long-awaited restructuring plan because of “cross-national” difficulties about job costs and workloads related to the A350XWB. Last year Airbus was beset by production delays surrounding its A380 super-jumbo; both projects are crucial to Airbus’s future competition with Boeing.

A plan to merge India’s two biggest state-owned airlines, Air India and Indian Airlines, came closer to fruition after it was approved by the country’s aviation minister. The proposal will create a national carrier that could compete as one of the world’s top 30 airlines. The minister also said that a promised merger announced last month between two private domestic carriers, Jet Airways and Air Sahara, would be permitted.

Sweden’s Volvo agreed to buy the 81% of Japan’s Nissan Diesel it does not own in a SKr7.5 billion ($1.1 billion) deal. The combined company will overtake DaimlerChrysler to become the world’s biggest maker of heavy lorries.

Japan’s Topix stockmarket index (a broader measure than the Nikkei) reached its highest level since November 1991, helped by share prices of big banks which rose in response to the Bank of Japan’s decision to raise interest rates by one-quarter of a percentage point, to 0.5%.

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Politics this week: 17th – 23rd February 2007

February 22, 2007 Leave a comment

Politics this week

Feb 22nd 2007
From The Economist print edition

articles from this week’s edition of The Economist
George Bush and Congress | A double spring offensive in Afghanistan | Canadian federalism | Italy’s government crisis | A repressive Ethiopia | A terrorist bombing in India | Germany’s car industry | The diamond industry | The Bank of Japan raises rates | Places in the sun | Dangerous asteroids | Africa and the CIA | Maurice Papon, collaborator


Italy’s prime minister, Romano Prodi, tendered his resignation after only nine months in office. He did so after a mutiny in his sprawling coalition led to the defeat in the Senate of government proposals to keep troops in Afghanistan. See article

Tony Blair said the number of British troops in Iraq would fall from around 7,100 at present to around 5,500 in the next few months, but that a British military presence would remain there at least into 2008, “for as long as we are wanted”. Denmark said it would withdraw all its 470-odd troops by August. See article

The commander of Russia’s strategic forces warned Poland and the Czech Republic that they could be targeted with nuclear weapons if they agree to host American anti-missile defence bases. America says the radar and rockets are designed to counteract Iranian missiles, not Russian ones. See article

Poland’s governing Law and Justice party is suing the country’s former president, Lech Walesa, for defamation. Mr Walesa called the current incumbent, Lech Kaczynski, a “blockhead” in a row over a report on alleged criminal activity and Russian influence in the country’s now disbanded military-intelligence service. See article

Ségolène Royal, the Socialist candidate for the French presidency, rejigged her campaign, promising more help for the low-paid and shuffling her advisers. Polling had shown her lagging Nicolas Sarkozy, her centre-right opponent, by ten points.

European Union environment ministers agreed in principle to cut greenhouse-gas emissions by 20% from 1990 levels by 2020. The plan, and the list of countries which will take most of the burden, must be agreed to by heads of state.

An appeals court in America ruled that suspected terrorists held at Guantánamo Bay do not have the right to challenge their detention in a federal court. The decision upholds legislation passed by Congress last autumn that was written to clarify the law, but the issue may end up yet again in the Supreme Court.

The Democrats failed to break a Republican filibuster in the Senate that would have allowed a vote on a resolution criticising George Bush’s policy in Iraq. Seven Republicans, including John Warner, the former chairman of the Armed Services Committee, joined the Democrats. The House of Representatives passed a similar resolution last week.

John McCain went to Iowa and Florida, where he courted social conservatives by proclaiming his strong support for anti-abortion legislation. The Arizona senator is expected to announce his bid for the White House next month.


Two bombs exploded on the Friendship Express, a train travelling from Delhi in India to Lahore in Pakistan. In the ensuing inferno, at least
68 people, mostly Pakistanis, died. Indian experts suspected Islamic militants with bases in Pakistan, but the two countries said the atrocity would not affect their peace process. Their foreign ministers went ahead with planned talks in Delhi, where the two countries signed an agreement on reducing the risk of accidental nuclear conflict.
See article

A United Nations special rapporteur, Philip Alston, accused the army in the Philippines of being in a state of denial about a spate of extra-judicial killings “convincingly attributed” to the security forces.

Muhammad Yunus, founder of Grameen, a big microfinance institution, entered into Bangladeshi politics with the formation of a new party. Separately, the military-backed government said it would take eight to ten months to prepare the voter-identity cards needed for an election. See article

Colombia’s foreign minister, María Consuelo Araújo, resigned after her brother, a senator, was arrested over allegations that he received cash from right-wing paramilitaries. The escalating scandal over links between the paramilitaries and pro-government politicians has brought criticism of the government of Álvaro Uribe from the United States Congress, which provides Colombia with around $600m a year in aid. See article

Jean Charest, the Liberal premier of Quebec, called a provincial election for March 26th. Opinion polls give the Liberals a five-point lead over the separatist Parti Québécois. See article

The crackdown on drug-traffickers by Mexico’s president, Felipe Calderón, continued as 3,000 troops were sent to two states bordering the United States and an assistant state prosecutor was arrested over alleged links with a drug gang. Meanwhile, gunmen in the border city of Nuevo Laredo shot and wounded a federal congressman.

According to his niece, Fidel Castro is in “stupendous” condition and will be “very active” again as he recovers from stomach surgery that led him to hand over his powers as Cuba’s president to his brother, Raúl.

Iran ignored a UN deadline to suspend its uranium-enrichment programme by February 21st or face wider sanctions. After the International Atomic Energy Agency, the UN‘s nuclear watchdog, meets early next month, the UN Security Council will have to decide on further steps to try to squeeze Iran into compliance. See article


The American secretary of state, Condoleezza Rice, met the Israeli prime minister, Ehud Olmert, and the Palestinian president, Mahmoud Abbas, together in Jerusalem, but appeared to have made scant progress towards restarting a peace process in earnest. See article

Rival Palestinian parties, meanwhile, continued to argue over the interpretation of their agreement signed earlier this month in Mecca, where they were supposed to have settled the terms of a national unity government.

The UN Security Council authorised the African Union to send peacekeepers for six months to Somalia, where Islamists were routed last month by troops from Ethiopia. It was unclear how soon the troops would arrive. Meanwhile, mortars, presumably launched by Islamist remnants, killed 16 people in the capital, Mogadishu.

Speaking on his 83rd birthday, Zimbabwe’s president, Robert Mugabe, seemed to confirm rumours of mounting intrigue within his ruling circle by accusing unnamed senior colleagues of plotting to oust him from office.

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